The ban is a first for managers of Norway’s giant portfolio of investments. The fund owns about 1.5 per cent of listed stocks worldwide.

“We’ve seen investors around the world looking at the risks associated with climate change as an integral part of investment decisions they make,” Trudeau said on Wednesday at a press conference.

“It is so important for Canada to continue to move forward on fighting climate change and reduce our emissions in all sectors. I can highlight that many companies in the energy sector have understood that the investment climate is shifting, and there is a need for clear leadership and clear targets to reach on fighting climate change to draw on global capital.”

The Trudeau Liberals have walked a fine line between support for Canada’s battered energy sector and making good on climate change goals since taking office. The latest test has come in response to the COVID-19 pandemic and Saudi-Russian oil price war, which has taken a heavy toll on energy producers.

Cenovus president and CEO Alex Pourbaix said the move by the Norwegian fund does not account for environmental advances in the industry. He pointed to his company’s goal of reaching net zero emissions by 2050.

“Pulling investments from the oil sands and claiming it’s for climate change reasons is more about publicity than fact,” he said in a statement. “Cenovus has reduced the GHG emissions intensity at our oil sands operations by approximately 30 per cent over the past 15 years.”

Excessive carbon emissions was listed as a criterion for exclusion from the fund four years ago. Last year, Norway announced a plan to divest from oil and gas stocks. Wednesday’s announcement marks the first time it has used its “excessive greenhouse gas emissions” rule to blacklist firms.

“The Council on Ethics recommended to exclude the companies because of carbon emissions from production of oil to oil sands,” NBIM said, referring to its ethics watchdog.

NBIM’s guidelines also include bans on investment in weapons firms and tobacco companies, and have observation rules assessing severe environmental damage, human rights and corruption.

Norway’s decision to shut the door on some of the biggest names in Canadian energy comes as the sector grapples with COVID-19’s iron grip on demand. Meanwhile, global oversupply is stretching storage capacity to its max.

West Texas Intermediate crude (CL=F) has recovered to above US$25 per barrel after briefly plunging into negative territory last month.

Canadian energy was not the only investment class to be blackballed by Norway on Wednesday.

NBIM also excluded petrochemical firm Sasol Ltd (SSL), German utility RWE AG (RWE.DE), Dutch company AGL Energy Ltd (AGL.AX), miners Glencore (GLEN.L) and Anglo American (AAL.L) over use and production of coal.

Egypt's ElSewedy Electric Co, Brazilian miner Vale SA (VALE), and Brazilian power holding Eletrobras were also excluded in the update.

NBIM said ElSewedy breached “severe environmental damage” rules as a result of the electric firm’s involvement in a Tanzanian hydropower project. Mining giant Vale was cited for repeated dam breaches.

Eletrobras was excluded due to “unacceptable risk that the company contributes to serious or systematic human rights violations.”